Even if you choose to migrate to the new income tax regime, you may still save tax for the Financial Year 2019-20.
The problem caused by Novel Coronavirus COVID-19 has resulted in nationwide loakdown to ensure that people maintain social distancing to contain the spread of the highly infectious disease. The lockdown has put a break on economic activities, creating further trouble for the already struggling Indian economy.
At this moment of crisis, the government wants people to take part in its relief effort as crores of poor daily wage earners starve as they become work less due to lack of economic activities.
To fight the spread of highly contagious Coronavirus COVID-19 and to feed crores of jobless workers, the government needs huge funds.
Moreover, the slump in indirect tax collections due to lockdown has hit the revenue collections hard. As a result, the government has launched a special fund “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)” for providing relief to the persons affected from the outbreak of Coronavirus.
The donation made to the PM CARES Fund shall be eligible for 100 per cent deduction under section 80G of the Income Tax Act as the provisions of the I-T Act has been amended through an Ordinance to provide the same tax treatment to the PM CARES Fund as available to the Prime Minister National Relief Fund.
By contributing to the Fund, taxpayers may save any amount of tax as the limit on deduction of 10 per cent of gross income shall also not be applicable for donations made to the PM CARES Fund.
So, apart from deductions up to Rs 2 lakh available on payment of home loan interest, up to Rs 1.5 lakh u/s 80C, up to Rs 1 lakh u/s 80D, up to Rs 50,000 u/s 80CCD(1B), you may save much more tax through donations to the PM CARES Fund.
As the date for claiming deduction u/s 80G under IT Act has been extended up to June 30, 2020, the donations made in the PM CARES Fund till June end shall be eligible for claiming deductions for either FY 2019-20 or FY 2020-20, which a taxpayer may claim according to his/her convenience.
So, even if you choose to migrate to the new income tax regime, you may still save tax for FY 2019-20 by donating to the PM CARES Fund even after March 31, 2020, but up to June 30, 2020. Same benefit would also be available for corporate taxpayers.